Gold prices posted their steepest single-day loss in three months on Friday as the US Dollar Index surged 1.1% to 104.8 following better-than-expected non-farm payrolls data. The June jobs report showed 245,000 new positions versus 190,000 expected, reducing the probability of a September Fed rate cut to 38% from 52% a week ago.
The selling accelerated through the afternoon session as stop-loss orders triggered below $4,400. Open interest in COMEX gold futures declined 3.2% on the session, suggesting long liquidation rather than new short positioning. ETF holdings tracked by the World Gold Council saw net outflows of 4.2 tonnes.
Fed funds futures now price in only one 25bp cut by December, down from three cuts projected a month ago. Higher real rates increase the opportunity cost of holding non-yielding gold, and today's move reflects a repricing of that risk. The US 10-year real yield rose 12bp to 2.08%.
Central bank buying remained a theme, with the People's Bank of China reporting 3 tonnes of new purchases in May (data released this week). However, this was insufficient to offset macro-driven liquidation. Analysts at ING note that gold's correlation with real yields has reasserted itself after a period of decoupling.
The break below $4,400 is a technical signal. If gold holds above $4,200 (200-day MA) next week, this is a buying opportunity for procurement teams with exposure. Consider fixing 25-30% of H2 2026 precious metals requirements at current levels rather than waiting for further downside.